AP Macroeconomics Basic Concepts

The study of macroeconomics refers to

• the part of economics that deal with large-scale economic concepts, like interest rates and gross national product

• the part of economics that deals with how individuals and business firms allocate scarce resources

• economic theory that stresses costs of production and small-business scale decisions

• the difference between normative and positive economics

• all of the above

According to the preceding diagram, the relationship between price and quantity supplied is illustrated by which line?

• A

• B

• C

• D

• A and B

Ron wants to buy an Xbox. According to the laws of economics, Ron will buy the Xbox if

• the opportunity cost less than the purchase costs

• the marginal benefit is greater than the marginal cost

• the marginal cost is greater than the marginal benefit

• the opportunity cost is equal to the marginal cost

• none of the above

A country is said to have a comparative advantage over another country when which of the following occurs?

• it can produce a good at a lower opportunity cost than another country

• it can produce a good utilizing fewer resources per unit of output than another country

• there is a higher degree of specialization and division of labor compared to another country

• when comparing each country's production possibilities frontiers, one country is operating at maxium efficiency and output.

• one country's production possibilities frontier is shifted farther to the right compared to another country's production possibilities frontier

Which of the following statements applies only to macroeconomics?

• Minimum wage should be increased to give more people disposable income.

• New technology will cause shift in demand curve

• The demand for cell phones is elastic

• Foreign imports and increasing wage demands are contributing to price inflation

• The Demand for gasoline is inelastic

It is beneficial for two countries to trade only when there is/are

• a mutually beneficial trade agreement

• increasing returns to scale

• decreasing returns to scale

• an absolute advantage in production between the two countries

• a comparative advantage in production between the two countries

Any point along the production possibilities curve is

• attainable and efficient

• attainable yet efficient

• unattainable and inefficient

• showing that resources are not being utilized to their full potential

• none of the above

What does economic growth refer to ?

• a rightward shift of the production possibilities curve

• movement along the demand curve

• movement along the supply curve

• the point where the supply and demand curves intersect

• the allocation of private property into public sectors

The production possibilities curve is concave because

• as production of goods and services increases, the opportunity cost decrease

• taxes increase as the production of a good increases

• as production of goods and services increases, the opportunity cost increase

Tom has 2 free hours to do whatever he would like. He thinks of the many activities he might engage in and settles on a choice between tutoring his younger brother in AP or sitting and watching television. His parents pay him $10 per hour when he helps his brother study. He chooses to sit and watch television for 2 hours. What is the opportunity cost for this decision?

• $20

• $10

• $0

• $5

• $30